Aug. 30, 2013

Overhead shot of Western Express property in Nashville. / File photo

Written by

Walter F. Roche Jr.

The Tennessean

A Nashville-based trucking company has filed suit in state court in Louisiana charging that Pilot Flying J cheated it out of $2.5 million in rebates and cost the company more than $73 million in added expenses.

The suit was filed late this week in New Orleans by attorneys for Western Express, a company featured prominently in a 120-page affidavit filed in federal court by an FBI agent in April. The document laid out an alleged multimillion-dollar scheme by Pilot sales executives to cheat trucking companies out of promised rebates.

The 13-page complaint charges that Pilot continually overcharged Western by up to 9 cents a gallon from 2005 until 2013, when the alleged scheme became public. It states that the various discount rates were spelled out in emails and direct conversations with Pilot sales executives.

According to the suit, Western purchased 90 percent of its fuel from Pilot and paid the truck stop firm more than $1 billion over the eight-year period.

Attached as an appendix to the suit is the FBI agent’s affidavit, including a transcript of a secretly taped sales executive session in which then-Pilot Vice President John Freeman bragged about cheating Western out of $450,000 a month in rebates. In the new complaint, Western’s attorneys cite a conversation in which Freeman asserted that Pilot CEO James A. Haslam was in attendance and knew about Western.

In addition to the allegation of cheating on rebates, the suit charges that Western also was hit with artificially inflated transportation charges.

'Reckless disregard'

After a raid of Pilot’s Knoxville headquarters by FBI and Internal Revenue Service officials in April, Haslam said he was launching his own investigation of the rebates and denied any knowledge of a rebate scheme. In a settlement agreement pending in federal court in Arkansas, Pilot officials have acknowledged that they may owe up to $40 million worth of rebates to trucking firms.

The FBI affidavit cites statements by Freeman included in the FBI affidavit in which he described how Pilot purchased a nonfunctioning aircraft from Western to make up for some of the rebate underpayments.

But the suit filed in New Orleans charges that Western, because of the loss of the promised rebate money, ran into credit problems and was hit with added penalties, interest and related expenses totaling more than $73 million.